COMMISSION STAFF WORKING PAPER SUMMARY OF THE IMPACT ASSESSMENT    Accompanying document to the
Date: 2010-12-14
Institutions: European Commission
Subjects: EU Member State, EU national, civil law, commercial law, enforcement of ruling, jurisdiction, mutual recognition principle

EN 

EN 

   EN 

 
EUROPEAN COMMISSION 

Brussels, 14.12.2010 
SEC(2010) 1548 final 

COMMISSION STAFF WORKING PAPER 

SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying document to the 

Proposal for a  

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on jurisdiction and the recognition and enforcement of judgments in civil and 
commercial matters 

(Recast) 

{COM(2010) 748 final} 
{SEC(2010) 1547 final} 

EN 

   EN 

 
 
 
 
 
 
 
 
1. 

BACKGROUND, CONSULTATION AND EXPERTISE 

Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of 
judgments in civil and commercial matters (known as "Brussels I") which entered into force 
in March 2002 is the matrix of civil judicial cooperation in the European Union. It identifies 
which  court  is  competent  for  solving  a  cross-border  dispute  and  ensures  the  smooth 
recognition  and  enforcement  of  judgments  given  in  another  Member  State.  While  the 
Regulation  is  overall  considered  to  be  working  well,  the  consultation  of  stakeholders  and 
several studies conducted by the Commission revealed the need for reform. In the same vein, 
the  Stockholm  Programme  calls  for  removing  the  remaining  restrictions  on  the  exercise  of 
rights by citizens and companies.  

In  preparation  of  the  Regulation's  revision,  the  Commission  broadly  consulted  stakeholders 
and  sought  extensive  external  expertise.  It  adopted  a  Green  Paper  launching  a  public 
consultation  in  April  2009  and  commissioned  a  total  of  four  studies  addressing  different 
issues of the reform. Empirical data supporting the preparation of the impact assessment was 
collected  by  a  further  external  study  and  an  European  Business  Test  Panel  survey.  The 
Commission also organised two major conferences, a meeting with national experts and two 
meetings with experts on arbitration. Additional comments were provided by an inter-service 
steering group within the Commission.  

2. 

PROBLEM DEFINITION, OBJECTIVES AND ASSESSMENT OF POLICY OPTIONS  

2.1. 

THE FREE CIRCULATION OF JUDGMENTS 

2.1.1.  Problem definition and scope 

A judgment given in one Member State does not automatically take effect in another Member 
State  but  has  to  be  validated  and  declared  enforceable  in  a  special  intermediate  court 
procedure  known  as  "exequatur".  This  procedure  is  costly  and  time-consuming.  On  an  EU-
average, it costs € 2.200 in a st raightforward case. This amount can increase exponentially in 
a  more  complex  or  contested  case  (to  about  € 12.700).  On  the  assumption  that  25%  of  all 
cases are complex, the overall cost of exequatur proceedings in the EU amounts to more than 
€47  million  per  year.  The  time  for  obtaining  exequatur  varies  from  a  couple  of  days  up  to 
several months in appeal cases up to two years. In more than 90% of cases, the procedure is a 
pure formality because there are no grounds for refusing recognition and  enforcement; only 
few decisions are appealed and appeals are rarely successful. The exequatur procedure adds to 
the complexities of cross-border litigation which deter companies from doing business cross-
border trade.  

2.1.2.  Objectives 

•  The specific objective of this part of the Proposal is to achieve a genuine free circulation of 

judgments in all civil and commercial matters.  

2.1.3.  Retained Policy Options 

•  Policy Option 1: Status quo 

•  Policy Option 3: Maintain exequatur but alleviate some of the burden for the claimant  

EN 

   EN 

 
•  Policy  Option  4A:  Abolish  the  exequatur  procedure  while  introducing  the  necessary 
safeguards  for  the  protection  of  the  rights  of  the  defence.  However,  exequatur  will  be 
maintained for judgments in defamation cases and collective redress proceedings. 

2.1.4.  Analysis  of  Impacts  of  preferred  Option  4A:  Abolition  of  the  exequatur  procedure 

and introduction of necessary safeguards 

(a)  Effectiveness:  This  option  would  fully  realize  the  objective  of  creating  a  genuine  free 
circulation of judgments in the European Union. (b) Key impacts: (i) Economic impact: The 
abolition  of  exequatur  would  eliminate  the  costs  and  delays  associated  with  the  current 
exequatur procedure, thereby allowing EU companies and citizens to save a major part of the 
current costs of almost € 48 Mio/year. In the vast  majority of cases in which the enforceability 
of  the  foreign  judgment  is  not  contested  by  the  defendant,  the  claimant  would  only  have  to 
bear minimal translation costs due to the introduction of standard forms which dispense with 
the  requirement  of  having  to  translate  the  full  judgment.  Only  in  complex  cases,  costs  for 
translating the full judgment and legal fees would continue to arise. This option would also 
encourage  more  businesses,  in  particular  SMEs,  to  engage  in  cross-border  transactions.  At 
present, only 25% of Europe's 20 Mio SMEs are engaged in cross-border trade; i.e. 15 million 
SMEs  could  potentially  expand  their  business  to  other  Member  States.  39%  of  these  SMEs 
would  be  a  lot  more  inclined  to  get  involved  in  cross-border  transactions  if  the  exequatur 
procedure were abolished. Even if only a quarter of them actually does, this would bring 1.4 
Mio  SMEs  into  the  internal  market.  (ii)  Fundamental  rights:  The  abolition  of  exequatur 
would  be  accompanied  by  procedural  safeguards  which  would  ensure  that  a  judgment  in 
breach of the right to a fair trial and the right of defence cannot be recognised and enforced. 
This  option  would  therefore  comply  with  the  Charter,  in  particular  its  Article  47.  Since  the 
grounds  which  could  be  invoked  against  the  enforcement  of  the  foreign  judgment  largely 
correspond to those which can be invoked today in the context of the exequatur procedure, the 
level  of  judicial  protection  for  cross-border  proceedings  would  not  be  lowered  compared  to 
the  status  quo.  (iii)  Financial  costs:  Member  States  would  incur  costs  due  to  the  need  to 
familiarize legal professionals with new procedures. These costs would be minimal if national 
safeguard procedures were modelled on the procedures adopted under European instruments 
which have abolished exequatur for certain types of claims. The proposal will also contain a 
standard form which aims at facilitating direct enforcement.  

2.1.5.  Comparing the retained Options and the preferred Policy Option 4A.  

Objectives/impact 

Option 1 – Status 
quo 

Option 3 – 
alleviating burden 
for applicant 

Option 4A – 
abolition of 
exequatur 

of 
Removal 
to 
barriers 
circulation of judgments 

remaining 
free 
the 

Economic impact 

Financial costs 

Fundamental rights 

0 

0 

0 

0 

+ 

+ 

– 

0 

++ 

+ 

– 

0 

EN 

   EN 

 
 
2.2. 

THE  OPERATION  OF  THE  REGULATION  IN  THE  INTERNATIONAL 
LEGAL ORDER  

2.2.1.  Problem definition  

•  The  jurisdiction  rules  of  the  Regulation  currently  (with  some  exceptions)  do  not  apply 
when  the  defendant  is  domiciled  outside  the  EU,  so  that  in  these  cases  the  Regulation 
refers to national law (so-called "residual jurisdiction"). Within the EU, national rules on 
jurisdiction  for  third  country  defendants  vary  widely  between  Member  States.  In  cases 
where the defendant is domiciled outside the European Union, 

•  European citizens and companies have unequal access to justice, 

•  unequal conditions for companies doing business in the internal market are created which 

can lead to a distortion of competition, 

•  the  enforcement  of  European  legislation  protecting  weaker  parties  (e.g.  consumers, 

employees, insured etc) is not ensured. 

2.2.2.  Objectives 

•  The specific objective is to improve access to justice, legal certainty, and protection of EU 

citizens and companies in disputes connected with third States.  

2.2.3.  Analysis of retained Policy Options 

•  Policy Option 1: Status quo  

•  Policy Option 3A: Minimum harmonisation of the rules on jurisdiction (Option 3A)  

•  Policy Option 4A: Full harmonisation of the rules on jurisdiction  

2.2.4.  Analysis of impact of preferred policy option 4A: Full harmonisation of the rules on 

jurisdiction 

(a)  Effectiveness:  The  full  harmonisation  of  jurisdiction  rules  would  ensure  both  full  and 
equal  access  to  justice  in  the  European  courts.  Access  to  justice  would  also  be  fully 
transparent because all rules on international jurisdiction would be consolidated in one single 
document,  the  revised  Regulation.  This  option  would  also  do  away  with  the  artificial 
distinction between defendants domiciled within the EU and outside the EU. This distinction 
is  no  longer  drawn  by  recent  EU  legislation,  notably  Regulation  4/2009  on  maintenance 
obligations,  and  the  Commission  proposal  for  a  regulation  on  succession  and  wills.  b)  Key 
impact: (i) Economic impact: This option will increase the possibilities for EU companies to 
litigate in the EU rather than abroad. This will bring about a reduction in the average litigation 
costs and delays for EU companies because litigation within the European area of justice is 
generally cheaper and simpler than litigation in a country outside the EU. Measures of judicial 
cooperation are largely absent in relations with third countries and the geographical distance 
of the competent court will most likely increase costs for witnesses and parties to appear in 
person.  Moreover,  a  harmonisation  of  the  rules  relating  to  third  country  defendants  will 
increase legal certainty and predictability which, in turn, is likely to produce cost savings for 
the  companies  involved.  The  improved  legal  framework  might  also  encourage  more 
companies  to  engage  in  cross-border  transactions.  In  addition,  possible  distortions  of 

EN 

   EN 

 
competition  which  result  from  the  divergence  of  national  rules  on  jurisdiction  would  be 
eliminated.  SMEs:  Any  cost  savings  will  be  particularly  beneficial  for  SMEs  which  do  not 
have  the  resources  to  handle  complex  international  litigation  in  the  same  way  as  large 
companies (ii) Financial costs Option 4A would trigger minimal to no financial costs for the 
Member  States.  (iii)  Fundamental  rights  The  full  harmonisation  would  improve  access  to 
justice for weaker parties (consumers, employees etc) in line with Articles 38 and 47 of the 
Charter  because  it  would  guarantee  their  access  to  an  EU  court  in  disputes  involving 
defendants from outside the EU. In addition, this option would ensure full access to justice to 
European companies in litigation involving third country defendants. The creation of a forum 
of necessity would ensure that European companies would have access to an EU court in case 
no  other  court  guaranteeing  a  fair  trial  has  jurisdiction.  Finally,  the  introduction  of  a  forum 
geared specifically at non-EU defendants would improve access to justice for companies from 
those Member States which currently do not have comparable provisions in their national law. 
(iii) Social impact This option would ensure that weaker parties retain the protection granted 
to  them  by  mandatory  EU  law.  (iv)  Third  countries  The  impact  of  Option  4A  on  non-EU 
countries would depend on the substance of the harmonised jurisdiction rules. The envisaged 
creation of a forum of necessity and a "mildly exorbitant" rule of jurisdiction, e.g. based on 
the location of assets having a link with the dispute in the territory, is hardly objectionable on 
a diplomatic level. On the contrary, impact on third countries would be positive as Member 
States would not be entitled to maintain more generous conditions for access to justice in their 
national law. Should international negotiations on a worldwide judgments convention resume, 
the  impact  of  the  revision  on  the  EU's  negotiating  position  would  equally  depend  on  the 
substance  of  the  harmonised  rules.  While  the  alignment  of  national  rules  as  such  would  be 
neutral in this respect, the precise contents of the rules could affect the EU's position in the 
negotiations.  

2.2.5.  Comparing the options and the preferred Policy Option 

Objectives/impact 

Option 1 

Option 3A 

Option 4A 

Improve protection of 
EU 
in 
parties 
disputes with non-EU 
defendants 

Economic impact 

Fundamental rights 

0 

0 

0 

Impact 
countries 

on 

third 

0 

+ 

0 

+ 

0 

++ 

+ 

+ 

0 or + 

EN 

   EN 

 
 
2.3. 

CHOICE OF COURT AGREEMENTS 

2.3.1.  Problem definition and scope 

The  overwhelming  majority  of  EU  business  involved  in  cross-border  trade  makes  use  of 
choice of court agreements (almost 70 % of all companies and 90% of large companies).  

•  The Regulation gives in principle effect to choice of court agreements but concerns have 
been raised that the effectiveness of such agreements may in practice suffer from abusive 
litigation tactics. This is due to the interplay with another provision in the Regulation, the 
so-called lis pendens rule which aims to avoid the situation that two courts in the EU deal 
with the same case at the same time. It stipulates that the court second seized of a dispute 
must  stay  proceedings  until  the  court  first  seized  has  ruled  on  its  jurisdiction.  A  party 
wishing to escape the choice of court agreement can considerably delay proceedings in the 
chosen court if it first seises a (non-competent) court in a country where the judicial system 
is  comparatively  slow.  Over  the  past  five  years,  7,7%  of  companies  reported  that  their 
contractual counterpart did not comply with the clause designating the competent court.  

•  The effectiveness of choice of court agreements needs to be ensured also beyond the EU's 
borders. The EU negotiated an international agreement, the Hague Convention on Choice 
of Court Agreements, which improves legal certainty for forum-selection-clauses  in  B2B 
relationships;  the  ratification  process  is  ongoing.  The  revision  of  the  Regulation  should 
ensure that the approach to choice of court agreements for intra-EU situations is coherent 
with the  one  which will potentially  be adopted for extra-EU situations. Under the Hague 
Convention,  the  court  seised  but  not  chosen  must  dismiss  the  case  unless  one  of  the 
exceptions established by the Convention applies.  

2.3.2.  Objectives  

The  specific  objective  is  to  enhance  the  effectiveness  of  choice  of  court  agreements.  The 
reform should also facilitate the ratification by the EU of the Hague Convention on Choice of 
Court Agreements.  

2.3.3.  Description of retained policy options 

•  Policy Option 1: Status quo.  

•  Policy Option 2: Exempt the chosen court from obligation to stay proceedings  

•  Policy Option 3: Give the chosen court priority to decide on its jurisdiction 

2.3.4.  Analysis of impacts of preferred Policy Option 3: Give the chosen court priority to 

decide on its jurisdiction 

(a)  Effectiveness  to  achieve  objectives:  Option  3  would  discourage the  use  of  tactical  pre-
emptive  claims  which  seek  to  undermine  a  valid  choice  of  court  agreement  and  thus  fully 
achieve the objectives set out above (b) Key impacts (i) Economic impact: Option 3 would 
eliminate  the  costs  and  delays  which  businesses  incur  today  due  to  their  partners'  bad  faith 
attempts to circumvent choice of court agreements. It is also likely to encourage at least part 
of  the  30%  of  businesses  which  currently  are  not  involved  in  cross-border  trade  because  of 
problems inherent in cross-border litigation or debt-recovery to do so. It would increase legal 

EN 

   EN 

 
certainty  for  businesses  and  boost  their  confidence  in  the  effectiveness  of  their  contractual 
arrangements  for  dispute  resolution.  The  drawback  of  this  solution  is  that  it  may  lead  to 
delays  in  judicial  proceedings  where  the  designated  court  eventually  holds  the  agreement 
invalid  (concerns  only  1.1%  of  companies  per  year)  and  the  parties  end  up  litigating  in 
another court. (ii) Financial costs Option 3 would only entail minimal implementation costs. 
(iii) Fundamental rights Option 3 would fully give effect to the will of the parties to a choice 
of court agreement. This would significantly improve the situation of the parties in terms of 
the  freedom  to  conduct  a  business  as  guaranteed  in  Article  16  of  the  Charter.  (iv) 
International  aspects:  Option  3  mirrors  the  solution  adopted  by  the  Hague  Convention. 
Importantly,  as  in  the  Convention,  priority  is  given  to  the  chosen  court  which  is  able  to 
proceed even if seised second.  

2.3.5.  Comparing the options and preferred Policy Option 

Objectives/impact 

Option 1 
Status quo 

Option 2 
Exemption from 
obligation to stay 
proceedings 

Option 3 
Giving priority to the 
chosen court 

Eliminate 
the 
possibilities for abuse

Economic impact 

Fundamental rights 

0 

0 

0 

International aspects 

0 

+ 

+ 

+ 

+ 

++ 

++ 

++ 

++ 

2.4. 

INTERFACE BETWEEN THE REGULATION AND ARBITRATION  

2.4.1.  Problem definition  

Arbitration  is  a  matter  of  great  importance  in  international  commerce,  as  it  used  by  larger 
companies  and  multinationals  on  a  regular  basis  (about  63%  of  large  European  companies 
prefer  arbitration  over  litigation).  Arbitration  is  currently  not  covered  by  the  scope  of 
Regulation  Brussels  I.  Difficulties  have  been  reported  concerning  the  relation  of  arbitration 
and court proceedings. Notably, a party challenging the validity of an agreement to arbitrate 
can  request  the  court  to  rule  also  on  the  merits.  This  can  lead  to  parallel  court  and  arbitral 
proceedings with the risk of conflicting outcomes where the agreement is held invalid in one 
Member State and valid in another. This situation can be abused by litigants wishing to escape 
an arbitration agreement. The problem which has been highlighted by a recent decision of the 
Court of Justice in the West Tankers case reduces the effectiveness of .  

2.4.2.  Objectives  

The specific objective of this  part  of  the  Proposal is to ensure a transparent and predictable 
coordination of court and arbitral proceedings which preserves or improves the attractiveness 
of the European Union as place of arbitration.  

EN 

   EN 

 
 
2.4.3.  Description of retained policy options 

•  Policy Option 1: Status quo  

•  Policy Option 2: Extend the exclusion of arbitration from the scope  

•  Policy  Option  3A:  Enhance  the  effectiveness  of  arbitration  agreements.  This 
option  would  provide  that  a  court  seised  with  a  dispute  involving  an  arbitration 
agreement would have to stay proceedings if an arbitral tribunal or a court at the 
seat of the arbitration was seised.  

2.4.4.  Analysis  of  impacts  of  preferred  Policy  Option  3A:  Enhance  the  effectiveness  of 

arbitration agreements  

(a) Effectiveness to achieve objectives This policy option would fully achieve the objectives 
outlined above. It would ensure the effectiveness of arbitration agreements by eliminating the 
risk  of  parallel  proceedings  and  by  reducing  the  possibilities  of  abusive  litigation  tactics.  It 
would also ensure that all judgments that currently circulate within the EU continue to do so. 
(b)  Key  impact  (i)  Economic  impact  Option  3A  would  eliminate  the  risk  of  abusive 
litigation  tactics,  with  the  economic  benefits  outlined  above.  In  addition,  Option  3A  would 
eliminate  the  risk  of  parallel  court  and  arbitration  proceedings,  thereby  significantly 
improving the attractiveness of arbitration in the EU and of European arbitration centers. (ii) 
Financial  costs  As  for  Option  2,  the  modification  of  the  Regulation  would  entail  only 
minimal  implementation  costs  for  Member  States.  (iii)  Fundamental  Rights  Arbitration 
would  become  more  effective  and  efficient  than  under  both  Options  1  and  2,  thereby 
improving the parties' access to alternative means of dispute resolution In addition, the option 
would  improve  access  to  justice  for  companies  wishing  to  challenge  (in  good  faith)  an 
arbitration agreement because it would establish a clear and transparent legal framework for 
such  challenges  while  defining  clear  rules  to  improve  legal  certainty  and  avoiding  dilatory 
tactics. The standards set in Article 47 of the EU Charter will be further strengthened under 
this option. Finally, it would be ensured that throughout the Union, maximum effect is given 
to the will of the parties which enhances their freedom to contract and freedom to conduct a 
business as guaranteed in Article 16 of the Charter. (iv) Third countries The attractiveness of 
arbitration in the European Union would be increased. 

2.4.5.  Comparing options and preferred Policy Option 

Objective/impact 

Option 1 
Status quo 

Option 2 
Extending the 
exclusion 

Option 3 
Enhancing the 
effectiveness 

Free 
judgments 

circulation 

of 

Ensuring  effectiveness  of 
arbitration in EU 

Economic impact 

Fundamental rights 

0 

0 

0 

0 

 –  

+ 

+ 

+ 

+ 

++ 

+ 

++ 

EN 

   EN 

 
3. 

NECESSITY OF EU ACTION (SUBSIDIARITY)  

The  problems  outlined  above  relating  to  the  existence  of  the  exequatur  procedure,  lack  of 
effectiveness  of  choice  of  court  agreements  and  the  interface  between  arbitration  and  the 
Regulation  are  caused  by  the  rules  of  existing  EU  law  and  can  only  be  remedied  by  the 
intervention  of  the  European  legislator.  The  harmonisation  of  jurisdiction  rules  concerning 
non-EU defendants is necessary to create a level playing field for companies engaged in the 
internal market and guarantee that the rights of "weaker parties" guaranteed by EU law can be 
enforced. These goals cannot be achieved by the Member States acting alone.  

4. 

LEGAL BASIS 

The  Regulation  has  been  adopted  on  the  basis  of  Articles  61  (c)  and  67  (1)  of  the  Treaty 
establishing the European Community. After the entry into force of the Treaty of Lisbon, the 
Treaty basis for adopting the revised Regulation consists of Articles 67 (4) and 81 (2) (a), (c) 
and (e) of the Treaty on the Functioning of the European Union.  

5. 

PROPORTIONALITY OF EU ACTION 

The  package  of  preferred  options  outlined  above  respects  the  proportionality  principle.  The 
changes  contemplated  in  the  package  of  preferred  policy  options  do  not  go  beyond  what  is 
necessary to address the problems identified. As outlined above, the benefits and savings of 
the  preferred  policy  options  largely  outweigh  its  costs  and  disadvantages.  The  potential  for 
economic savings is substantial while the financial costs for implementing the reform in the 
Member States are overall small. The reform package has the potential to promote trust in the 
internal  market  and  encourage  more  companies  and  citizens  to  engage  in  cross-border 
transactions,  thereby  reaping  the  benefits  of  the  internal  market.  Such  increased  economic 
activity, taken together with the savings the reform entails, would contribute to help citizens 
and companies overcome the current financial  

6. 

MONITORING AND EVALUATION 

The  Commission  will  prepare  every  five  years  evaluation  reports  on  the  application  of  the 
Regulation. Since most Member States currently do not systematically collection of statistical 
data on the application of the Regulation, the revised Regulation will contain a requirement to 
provide  relevant  information,  notably  on  the  number  of  recourses  to  the  special  review 
procedures  created  to  safeguard  the  defendant's  fundamental  rights  and  on  the  outcome  of 
these procedures. 

EN 

   EN